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Regulatory

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DOJ spells out industry patent framework

by William McConnell  |  Published February 14, 2012 at 10:23 AM
The Department of Justice on Monday approved Google Inc.'s $12.5 billion purchase of Motorola Mobility Holdings Inc. without imposing any conditions. There has been some speculation that the DOJ would restrict Google from limiting access to Motorola's patent portfolio in ways that would prevent rival cellphone makers from using patents that are essential components of mobile phones.

Although the DOJ cleared the deal, the approval was accompanied by a statement addressing the need for regulators to continue watching so patents that are critical components of standard industry technology are administered by their owners without running afoul of antitrust law.

Also on Monday, the DOJ closed two other patent-related transactions. In one, the DOJ approved the $4.5 billion purchase of Nortel patents by a consortium including Apple Inc., Microsoft Corp. and Research In Motion Ltd. The DOJ also said it was closing its investigation of the sale of 882 Novell Inc. patents to a consortium formed by Microsoft, Apple, EMC Corp. and Oracle Corp. The Novell deal was allowed to go though in April but the agency said it would continue its investigation.

"The antitrust division has determined that each acquisition is unlikely to substantially lessen competition," the agency said in its announcement. Nevertheless, the DOJ said it "continues to have concerns about the potential inappropriate use of [standard-essential] patents to disrupt competition and will continue to monitor the[ir] use in the wireless device industry, particularly as they relate to smartphones and computer tablets."

The DOJ's vow to continue examining how critical technology patents are managed comes amid an increasingly tense legal struggle between Google, Apple and Microsoft over the rights to smartphone technology.

The DOJ attempted to reach a binding agreement with Google to provide access to Motorola's patents on "fair, reasonable and nondiscriminatory terms" in return for clearing the Motorola deal, but without establishing that the acquisition would cause additional harm to competition it had no leverage to force a settlement. Google's nonbinding promises to treat rivals fairly have been "more ambiguous" than the agency would have liked, according to the DOJ.

Earlier on Monday, Google won unconditional approval from the European Commission for the purchase of the mobile handset maker. The EC said it also would monitor whether players in the business use patents in a way that violated antitrust law.

Last week, Google sent a letter to the European Telecommunications Standards Institute promising to license on fair and reasonable terms the patents it is obtaining with Motorola Mobility. In the U.S., Google's executive chairman, Eric Schmidt, said when the deal was announced last year that the company would not favor Motorola. In its letter to standard-setting boards, Google said it would try to resolve any disputes through negotiation before asking courts to block use of the Motorola Mobility technology.

Microsoft followed up with its own pledge and at the same time tried to cast Google's in a bad light by taking the additional step of promising not to go to court to stop rivals from using industry-standard patents held by Microsoft. Microsoft said it will also make its industry-essential patents available without requiring companies to cross-license their own nonessential technology.

Apple on Monday sued Motorola Mobility in federal court in Los Angeles, alleging it is wrongfully claiming Apple infringed on an industry-standard patent.

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William McConnell

Bureau chief, Washington

Bill McConnell, Washington bureau chief, has covered a range of issues critical to the deal community, including antitrust, financial reform and corporate accounting. Contact



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